MERRILL LYNCH FUTURES, INC.

V CA
STATEMENT OF FACTS:
ML Futures, a foreign corporation not licensed to do business in the Philippines and Sps.
Lawa entered into a Futures Customer Agreement by which the former agreed to act as
the Sps. Laras broker for the purchase and sale of future contracts in the US. Orders to
buy and sell futures contracts were transmitted through the facilities of Merrill Lynch
Philippines, Inc. (MLPI), a Philippine corporation and a company servicing ML Futures
customers. Sps. Lara knew and was duly advised that LPU was not a broker in future
contracts and that it did not have a license from SEC to operate as a commodity trading
advisor. Sps. Lara actively traded in futures contracts for 4 years there being regular
accounting between the parties.
Because of a loss incurred in respect to index futures, Sps. Lara became indebted to ML
Futures. The former however refused to pay alleging that the transactions were null and
void since MLPI had no license to operate. Futher, they has not doing business with ML
Futures but with MLPI.

STATEMENT OF THE CASE:

ML Futures filed a complaint before the trial court for recovery of debt plus interest.
Preliminary attachment issued ex parte and the Sps were issued summons. Sps. Lara
then filed a motion to dismiss alledging that ML Futures had no legal capacity to sue and
the complaint state no cause of action. RTC granted motion to dismiss. CA affirmed.
Hence, this petition for certiorari.

ISSUE:
WON lower court is right in granting motion to dismiss

HELD:
YES. When such ground is asserted in a Motion to Dismiss, the general rule governing
evidence on motions applies. However there was no affidavit or deposition attached to
the Motion to Dismiss or thereafter offered as proof of the averments of their motion. The
motion was not verified.
On the ground that the complaint states no cause of action, the test of the sufficiency of
the facts alleged in the complaint as constituting a cause of action is whether or not,
admitting the facts alleged in the complaint. Indeed, it is an error for a judgment to
conduct preliminary hearing and receive evidence on the affirmative defense of failure of
the complaint to state a cause of action.

OTHER ISSUE/S: NON-CIVPRO

CORPO: ML Futures was doing business in the Philippines without license
: Sps. Lara are estopped to impugn ML Futres capacity to sue them in court for
they are fully aware of its lack of license to do business in the Philippines.